CONTENTS OF THIS ISSUE:
Stop-Gap Spending Resolution Becomes Law
Rep. Berman Addresses Advisory Board Lunch
Energy and Water Bill Headed for the President
Energy & Water Conference Funds Fusion, NIF
Education Appropriations in Senate Includes Title I Hold Harmless; House Version
         Does Not; Conference Showdown Likely
Reformulated Gas Bill Moves Forward In The House
Ways and Means Reports Tax bill
State Senate Research Report Looks at Internet Taxation
Governor, California Members Seek Study on Moab Uranium Tailings
Letter Urges Basic Research Funding
Brownfields are Prime Focus of Commerce Superfund Revision Markup
Farmworkers Hit By Citrus Freeze to Get Agriculture Funds
California Poverty Down Sharply But Still High, State’s Small Jump in Income Lags Other States
Cruz Elected Chair of CPB Board

On Tuesday, September 28, Congress moved to prevent an October 1 shutdown, sending to the President a three-week stop-gap spending measure. The continuing resolution, H.J.Res. 68, will keep the government operating until October 21 in the hopes that nine remaining federal appropriations bills can be completed by then. The House and Senate passed the measure on Tuesday by a vote of 421-2, and 98-1, respectively. The President signed it on Thursday, September 30.
 

Rep. Berman Addresses Advisory Board Lunch

Rep. Howard Berman (Valley Village) was the guest speaker at the Institute’s Advisory Board lunch on Wednesday, September 29. Congressman Berman is a senior member of the Judiciary and International Relations Committees. He spoke on a wide variety of issues ranging from immigration to the recently-enacted limited liability for biomaterials. In response to questioning, Mr. Berman stated that he believes NAFTA has been a success, especially for California with its dominance in global trade. He also indicated that he believes the reapportionment of California’s congressional seats after the 2000 census will be complicated by the fact that state legislators are term-limited, and may therefore allow their personal interests to enter the debate. Finally, he mentioned that the House leadership has indicated that they want to bring a database copyright bill to the floor before adjournment. There are two bills on the issue, H.R. 354 introduced by Rep. Howard Coble (NC) of the Judiciary Committee, and H.R. 1858, introduced by Rep. Tom Bliley of the Commerce Committee. The two committees will have to resolve their differences over the content of the legislation before a bill can go to the floor.

The Institute thanks Cliff Jernigan of Advanced Micro Devices (AMD) for hosting the luncheon.
 

Energy and Water Bill Headed for the President

The House and Senate this week cleared the conference report on the Energy and Water appropriations bill with little trouble. The House voted 327-87 on Monday, September 27 to adopt the report, and the Senate followed on Tuesday by a vote of 96-3.

The $21.3 billion bill contains $60 million in funding for the California Bay-Delta restoration project. Of that, $30 million was earmarked for ecosystem restoration and $30 million for water use efficiency, water quality, groundwater and surface storage, levees, conveyance and watershed management. The report also prohibits more than $5 million being used for planning and management functions. The $60 million in funding is less than last year’s $75 million appropriation, and far below the full authorization level of $143 million. Nevertheless, over the past three years a total of $220 million in federal funding has been appropriated for the project.

The appropriations bill also includes $42 million for the Central Valley Project (CVP) Restoration Fund, as well as smaller amounts for several other California projects.
 

Energy & Water Conference Funds Fusion, NIF

The Energy and Water Development Appropriations bill sent to the President this week includes the House’s $250 million level for fusion energy research funding (rather than the Senate’s $221 million). The measure praises a recent report on fusion from the Secretary of Energy’s Advisory Board and a comprehensive scientific plan developed by the Fusion Energy Sciences Advisory Committee (FESAC).

The bill also provides $475 million for inertial confinement fusion, which includes $248 million for the National Ignition Facility, the high-energy laser facility which is under construction at Lawrence Livermore National Laboratory. The bill’s report language notes recent reports that NIF construction may be facing challenges, adding: “The conferees direct that the Secretary of Energy complete and certify a new cost and schedule baseline for the National Ignition Facility and submit that certification to the Committees by June 1, 2000,” in order to ensure continued funding.

Both the House and Senate have passed defense authorization bills containing provisions to revise the organizational structure at the Department of Energy’s nuclear weapons laboratories.
 

Education Appropriations in Senate Includes Title I Hold Harmless; House Version Does Not; Conference Showdown Likely

The massive Labor-HHS-Education appropriations bill has been shaping up as one of the fall’s primary Congressional sticking points, with roughly $90 billion presently at stake and many calling for considerably more spending. One provision which could impact California significantly is the Senate’s insertion of yet another “hold harmless” provision on Title I education grants for the disadvantaged.

For several years, the Senate has been successful in freezing funding for Title I by preventing any shifts among states unless overall funds for the program increase (an infrequent event). The net result is that schools in California and other states with fast growing poor populations do not realize the growth they deserve. The hold harmless is unanimously opposed by California’s Congressional delegation.

Targeted at schools with large numbers of poor children, the Title I program is the largest education grant and the fourth largest federal formula of any kind. California typically receives between 11% and 12% of Title I funding, despite being home to nearly 15% of the nation’s poor children.

The Senate Appropriations Committee passed its version of the bill on Tuesday, while the House was scheduled to continue consideration on Thursday. The House version of the bill omits the hold harmless language.
 

Reformulated Gas Bill Moves Forward In The House

H.R. 11, introduced by Rep. Brian Bilbray (Imperial Beach), was reported out of the House Commerce Subcommittee on Health and the Environment on Thursday, September 30 by voice vote. Under the Clean Air Act’s Reformulated Gasoline (RFG) program, oxygenates, such as methyl tertiary butyl ether (MTBE), are required to be used in gasoline sold in air quality non-attainment areas. The bill would allow California to use gasoline without oxygenates such as MTBE, as long as the state’s air quality and emissions standards continue to meet or exceed federal standards. Recently, concerns that MTBE leaking into California’s water system are creating a severe health hazard have prompted the state to move to phase out MTBE. Sen. Dianne Feinstein has introduced a bill in the Senate that is identical to the Bilbray bill.

During the markup an amendment offered by Rep. Gene Green (TX) was approved by voice vote. The amendment requires EPA to determine that California’s reformulated gasoline meets or exceeds federal emissions standards before the state’s exemption could take effect. Reps. Bilbray and Anna Eshoo (Atherton) opposed the amendment, stating that EPA has already determined that California’s standards meet or exceed federal standards. Rep. Henry Waxman (Los Angeles), however, supported the amendment.

In addition to Rep. Bilbray, H.R. 11 has been co-sponsored by 50 other members of the California delegation, and is strongly supported by the Governor as well.

The House Science Subcommittee on Energy and Environment, chaired by Rep. Ken Calvert (Corona) held a hearing on reformulated gas and MTBE on Thursday, as well. Rep. Calvert, a co-sponsor of H.R. 11, stated that one purpose of the hearing was to determine whether air quality standards can be maintained if lower or non-oxygenated gasoline is used; and whether there will be severe gasoline shortfalls, with concomitant price spikes, if MTBE is eliminated from the fuel supply. The subcommittee heard from witnesses representing Chevron Products Company, and the American Petroleum Institute, among others. Copies of the testimony can be obtained on the Committee’s website at: http://www.house.gov/science.
 

Ways and Means Reports Tax bill

On Friday, the House Ways and Means Committee, by a party-line vote of vote of 23-14, reported H.R. 2923, which contains an extension of the R&D (research and experimentation) tax credit, the welfare-to-work credit, and the work opportunity tax credit, among other provisions. The R&D credit was extended for five years, as expected. However, tax credits earned by taxpayers for expenditures incurred after June 30th, 1999 could not be claimed, or taken into account for estimated tax purposes, prior to October 1, 2000. The welfare-to-work and work opportunity credits were extended for 18 months.

The Committee defeated a substitute amendment offered by Rep. Charles Rangel (NY) that would have extended the R&D credit for only 18 months.

The bill faces an uncertain future, because only the $1.5 billion revenue loss expected in FY00 was offset, whereas the total five year cost of the bill is about $24 billion. Because of this the Treasury Department indicated the President may veto the bill.

California’s high technology industries strongly support making the R&D tax credit permanent, to avoid almost annual uncertainty about its availability.
 

State Senate Research Report Looks at Internet Taxation

California’s Senate Office of Research released a report this week on Internet taxation and the growth of electronic commerce. The report entitled: Taxing Internet Sales and Commerce examines tax and equity issues involving electronic commerce and the unparalleled growth of electronic commerce through the Internet. The report suggests approaches for state policy-makers to consider while debating taxation of e-commerce, such as working with other states to develop a unified strategy for levying and collecting taxes on both Internet and mail-order purchases. The study also discusses area where federal action might first be needed to ensure a collective approach to e-commerce taxation.

The report is available at: http://WWW.sen.ca.gov/sor/e-commerce.html .
 

Governor, California Members Seek Study on Moab Uranium Tailings

Governor Gray Davis and Utah Governor Michael Levitt, as well as 16 California Members of Congress, have sent separate letters to Secretary of Energy Bill Richardson concerning the Atlas uranium mill tailings site near Moab, Utah. The two letters ask the Secretary to reprogram $1.4 million of the Department’s FY99 funds for a feasibility study and Groundwater Corrective Action Plan for the Moab site. The Altas Corporation’s Moab site is the nations fifth largest uranium tailings pile in the U.S. filled with approximately 10.5 million tons of mill wastes. The site is located only 750 feet from the Colorado River and is leaking toxins and radioactive uranium into the groundwater that feeds into the river.

Because of the concerns over contaminating Colorado River water, relied on by 25 million people throughout California and six other states, the letters urge Secretary Richardson to fund a thorough evaluation of all treatment options for the Moab site, including moving the tailings to a safe location and recommending a groundwater treatment plan.

The congressional letter was also signed by several members from the other Western states reliant on Colorado River water: Utah, New Mexico, Arizona, Nevada, Colorado, and Wyoming.
 

Letter Urges Basic Research Funding

Approximately 70 members of Congress, including a bipartisan cross-section of California members, sent a letter Thursday to Appropriations Chair Bill Young (FL) and Ranking Democrat David Obey (WI) recommending increases in funding for the budgets of the National Science Foundation, the Office of Science of the Department of Energy, and the National Aeronautics and Space Administration.

The letter states that, “Over half of our economic growth today results directly from research and development in science and technology,” expresses concern over long-term U.S. competitiveness with Germany and Japan now spending a greater share of their GDP on R&D, and links future budget surpluses to maintenance of our nation’s technological leadership.

The letter also emphasizes the importance of science and technology education, noting that the U.S. “had to increase our H-1B visa allocations in order to provide a sufficient number of workers for our technology industries. We must improve our science education programs and our university research programs to develop and maintain the brainpower that fuels the innovation and development that has built our economy.”

A study of the geographic distribution of federal research and development expenditures conducted by NSF found that California wins 22.6% of R&D funds. In a letter to California delegation members, the research university members of the Corporation for Network Education Initiatives in California (CENIC) wrote “While we recognize the tough choices to be made under difficult budget allocations, the investment we make today in IT promises a robust economy in California and the nation for the next century.”
 

Brownfields are Prime Focus of Commerce Superfund Revision Markup

The stakes rose this week in the federal-level conversation about brownfields when a House Commerce Committee panel marked up a significant environmental cleanup revisions bill. On a largely party-line vote, the Finance and Hazardous Materials Subcommittee marked up H.R. 2580 and passed a substitute amendment, offered by panel Chair Michael Oxley (OH) which makes substantial changes to the federal superfund law, while also addressing brownfields concerns.

The measure would promote reuse of brownfields (former industrial and military sites in need of major environmental restoration) by limiting some cleanup liability for owners, buyers and sellers. The bill also goes further, changing superfund laws by limiting liability for municipal landfill owners and relatively small businesses (below 75 employees and $3 million in revenues) and calls for future reductions in the program. The bill does not propose reinstatement of the superfund tax.

The Subcommittee defeated, 12-15, an alternative proposed by Ranking Democrat Ed Towns (NY) which would have focused on brownfields primarily. California is home to a significant share of the nation’s brownfield sites.
 

Farmworkers Hit By Citrus Freeze to Get Agriculture Funds

The Department of Agriculture on Thursday released $9.4 million in funding to assist low income migrant and seasonal farmworkers in the Central Valley. The funds, requested by Sen. Dianne Feinstein earlier this year, were appropriated through the FY99 Disaster Supplemental bill passed earlier this year.

Most of the funds ($9.1 million) will be used for food vouchers, rent and mortgage assistance, utilities, school supplies, and transportation for the almost 28,000 farmworkers affected by the freeze. The remaining $300,000 will go to Tulare County for medical care, dental care, and medicine to help more than 14,000 unemployed farmworkers.
 

California Poverty Down Sharply But Still High, State’s Small Jump in Income Lags Other States, Census Data Shows

According to Census figures released Thursday, California’s poverty rate declined more rapidly than the rest of the nation, but it remains well above the national average. California’s poverty rate fell from 16.8% in 1996-97 to 16.0% in 1997-98, a decline of 4.8%. (Two-year periods are used for statistical accuracy reasons.) This contrasts with the national poverty rate of 13.0% in 1997-98, which had fallen just 3.7% from the preceding year. California’s poverty rate thus remains three full percentage points above the national average, and the state’s rate ranks 10th highest of the 50 states plus the District of Columbia. The state’s ranking represents an improvement over last year’s figures, when California ranked 8th, and places it between New York and Texas, each of which have similar percentages of state residents living below the poverty line. Poverty figures are used to distribute funds for a number of federal formula grant programs.

The Census Bureau also released income figures, which showed California’s median income rising, but not as quickly in the nation as a whole. The median income for the state rose by $307 or 0.8%, from $40,317 to $40,623 from 1996-97 to 1997-98. Meanwhile, in the U.S. generally, median household incomes rose from $37,227 to $38,233, a gain of more than $1000 or 2.7%. California’s median income level ranked it 17th out of 51 (50 states plus DC), as other states continue to surpass it. California was third in the nation in 1980, and 12th in 1990.

The Bureau releases metro area statistics for only two areas nationwide. Los Angeles’ median income rose 2.2%, or $838, over the period, or from $38,682 to $39,520. By inference, the Los Angeles area’s gain and the slim rise for the state overall probably means that the rest of the state actually saw an income decline, in inflation-adjusted dollars.

Nationwide, the child poverty rate declined from 19.9% to 18.9%, reportedly the lowest rate since the 1970s. No child poverty figures were available at the state level.

The full reports, Poverty in the United States: 1999, and Money Income in the United States: 1998, are available at http://www.census.gov/Press-Release/www/1999/cb99-188.html .
 

Cruz Elected Chair of CPB Board

This week, Frank Cruz, a past Chair of the California Institute Board, was elected to Chair the Board of Directors of the Corporation for Public Broadcasting. The CPB funds the programming and operation of public television and radio stations. Cruz is a former history professor, veteran newscaster and businessman, and founder of Spanish language network Telemundo. He has served on the CPB board since 1994.
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